Commercial land loans allow borrowers to purchase commercial property, including raw land, buildings, and properties in need of rehabilitation. Financing terms vary, with short-term and long-term loans available. Raw land loans are the most difficult to obtain, while land development and commercial construction loans are easier if the borrower has a successful history. Rehabilitation loans are also an option.
Commercial land loans, also called commercial loans, are a type of loan that allows the borrower to purchase commercial property. There are many types of business loans, and the one thread that unites them all is the fact that the loan is used to further a business endeavor. Although the term “commercial land loan” is generally a reference to a raw land loan, it can also be used to describe a loan for the purpose of purchasing and renovating a building or establishing a line of credit for a land development project. . Financing terms for this type of loan vary, with short-term and long-term loans available.
Raw land loans, or commercial loans to purchase undeveloped property, are the most difficult commercial land loans to obtain because the complete lack of development carries great risk for the lender. Although this type of commercial loan arrangement is possible, banking institutions generally do not lend large amounts of money for raw land loans unless the property has some intrinsic value, such as a strategic location. The amount of financing available with this type of business loan is generally based solely on the value of the property.
Land development and commercial construction loans are the next step up from raw land loans. These commercial land loans are a bit less difficult to obtain, particularly if the borrower has a past history of successful land development projects or a working relationship with the banking institution. With this type of business loan, the borrower is extended a line of credit to develop land that he already owns or intends to purchase. Development projects that fall into this category of commercial land loans may involve building a residential neighborhood or developing a commercial center.
A rehabilitation loan is another option on the commercial land loan menu. Commercial properties, including apartment buildings, warehouses, and retail stores, sometimes fall into disrepair from neglect or age. A borrower may apply for a commercial property rehabilitation loan to make repairs to a property they already own or plan to purchase. In some cases, the lending company or banking institution will also lend an amount sufficient to purchase said property. The loan value for these commercial land loans is generally based on the estimated value of the property after all repairs and improvements have been made.
Smart Asset.
Protect your devices with Threat Protection by NordVPN
